The city of McCall averted municipal bankruptcy Wednesday morning when the McCall City Council decided to accept an extension on a contempt of court motion from attorneys for Employers Insurance of Wausau and St. Clair Contractors Inc.
The contempt of court hearing had been scheduled for today in Boise before U.S. District Court Judge B. Lynn Winmill, but :hat hearing was postponed.
The postponement follows the city's acceptance of an offer by Wausau and St. Clair to delay the contempt hearing until May 15.
By that time, the city hopes to have issued S6 million in sewer revenue-bonds to pay off the balance due over mismanagement of the construction of the city's wastewater storage pond, known as the J-Ditch pond.
On Friday, Fourth District Judge Thomas Neville gave the city authority to issue the bonds. The ruling came two days after Neville heard the city's request for the authority to issue the bonds without a public vote.
On Monday, the council told Wausau attorney Ron Blewett of Lewiston that the city would file for bankruptcy rather than risk an unfavorable ruling by Winmill at today's scheduled hearing.
The resolution said the city would comply with Winmill's previous judgments to pay Wausau and St. Clair.
The companies responded on Tuesday with an offer to delay the contempt of court motion until May 15.
"That is more time than the city said it would take to pay us," Blewett said on Tuesday. "The city provided a written schedule to Wausau. The city's schedule said that if Judge Neville's findings and conclusions were completed by March 3 that they could pay us by May 1."
If the city does not pay the judgment by May 15. then Wausau and St. Clair will ask Winmill for another contempt of court hearing date to be set at that time. Neville's ruling that the city's request for revenue bonds was an ordinary and necessary expenditure of the city issued Friday is now subject to an appeal period.
After the appeal period ends April 11, the city will be able to proceed with the bonding process.
The city's sewer ratepayers would repay the revenue bonds over30 years. Sewer rates could increase by more than $11 per month over that time.
The city lost a lawsuit to Wausau and St. Clair in 2004 when a jury ordered the city to pay the two companies $4.95 million.
Interest and attorneys' fees accrued to about $7 million.
In April 2007, Winmill ordered the city to take immediate action to pay the judgment against it.
The city, paid $302,000 from surplus funds in June. In November, the city used a tax revenue anticipation note to pay an additional 3660,000 toward the judgment.
